2 answers
3
Questions
Asked
735 views
How much money do you get from a pention
I am not to sure how much you get #money
Login to comment
2 answers
Updated
Kim’s Answer
Brandon,
There are many variables that go into determining how much a pension is. Stop a minute and think about pensions. Let's say a person works from the age of 25 to the age of 55. That's 30 years. Let's say another person works from the age of 35 to 65. That's also 30 years. Let's say they made exactly the same rate of pay. Their pensions will be different. Why? Because pensions are usually based on actuarial tables - how long each person is expected to live. After all, the pension will pay out for the rest of their lives. So, the first gentleman might be expected to live another 33 years, where as the second gentleman would be expected to live only another 23 years. So that they both receive approximately the same amount of money over their remaining lifetimes, the second individual would have a higher monthly payment.
Pensions are also based on salary. Those making more money get higher pensions. A lot more. Sadly, I've known custodians who were not able to pay their health insurance premiums with their retirement checks.
As you go through life, I encourage you to consult with financial planners, if they are made available to you through your 401K. They can help you to plan. In retirement, you should have multiple income sources. So, one might be your pension if you have one, one could be a 401K or a ROTH IRA account, and one would be your Social Security check. Plus any other savings. If you have all of these put together, retirement can be affordable. You will also want to learn skills about money management: how to borrow money, how to make spending decisions, prioritizing needs over wants, not borrowing except for major purchases, etc. There's a lot to learn, and most of us made a few mistakes along the way.
You are asking really good questions, and it is good to see you thinking about such things at such a young age!
Kim
There are many variables that go into determining how much a pension is. Stop a minute and think about pensions. Let's say a person works from the age of 25 to the age of 55. That's 30 years. Let's say another person works from the age of 35 to 65. That's also 30 years. Let's say they made exactly the same rate of pay. Their pensions will be different. Why? Because pensions are usually based on actuarial tables - how long each person is expected to live. After all, the pension will pay out for the rest of their lives. So, the first gentleman might be expected to live another 33 years, where as the second gentleman would be expected to live only another 23 years. So that they both receive approximately the same amount of money over their remaining lifetimes, the second individual would have a higher monthly payment.
Pensions are also based on salary. Those making more money get higher pensions. A lot more. Sadly, I've known custodians who were not able to pay their health insurance premiums with their retirement checks.
As you go through life, I encourage you to consult with financial planners, if they are made available to you through your 401K. They can help you to plan. In retirement, you should have multiple income sources. So, one might be your pension if you have one, one could be a 401K or a ROTH IRA account, and one would be your Social Security check. Plus any other savings. If you have all of these put together, retirement can be affordable. You will also want to learn skills about money management: how to borrow money, how to make spending decisions, prioritizing needs over wants, not borrowing except for major purchases, etc. There's a lot to learn, and most of us made a few mistakes along the way.
You are asking really good questions, and it is good to see you thinking about such things at such a young age!
Kim
Tammy Laframboise
Present pension and financial planning information to members of a pension
43
Answers
Updated
Tammy’s Answer
Pensions are based on a detailed plan document. Every plan is different. The amount of pension you receive will depend. There are many elements of the pension that will impact the amount of the pension. Here is a list of 10.
1. Who contributes to the pension plan. Is it the employee, the employer or both and what is the contribution rate? This provides the funding for the pension that will ultimately be paid.
2. How long are the contributions made for?
3. Can you transfer pension credit from another plan into the plan that you are currently contributing to? Is there other eligible service that you can buy back to increase your pension credit and, therefore, increase your pension?
4. What is the formula used for determining the amount of pension you will receive?
5. What are the other features of the plan that will impact the cost of the pension? For example, pensions that provide inflation protection cost more to fund than those without?
6. Are there any guarantees associated with the pension? For example, single members will be paid for a minimum of 5 years and if they die within that period the remaining payments continue to be made to a beneficiary.
7. What actuarial assumptions are being used and are these changing? Estimates of how long people will live is an important assumption, as are investment expectations, inflation and others.
8. Who makes the investment decisions? Defined benefit plans have investment professionals who are responsible for investment policy and decisions, whereas, in defined contribution plans it is the individual members who each make their own investment decisions from a list of available options.
9. What are the survivor benefits?
10. How do the laws that govern pensions and taxes impact the costs of running the plan and the benefits available under the plan?
The longer that you work and contribute to a pension plan, the greater the pension benefit will be.
Ask a future employer to explain the pension plan.
Ask future employers if they provide education about the pension plan.
1. Who contributes to the pension plan. Is it the employee, the employer or both and what is the contribution rate? This provides the funding for the pension that will ultimately be paid.
2. How long are the contributions made for?
3. Can you transfer pension credit from another plan into the plan that you are currently contributing to? Is there other eligible service that you can buy back to increase your pension credit and, therefore, increase your pension?
4. What is the formula used for determining the amount of pension you will receive?
5. What are the other features of the plan that will impact the cost of the pension? For example, pensions that provide inflation protection cost more to fund than those without?
6. Are there any guarantees associated with the pension? For example, single members will be paid for a minimum of 5 years and if they die within that period the remaining payments continue to be made to a beneficiary.
7. What actuarial assumptions are being used and are these changing? Estimates of how long people will live is an important assumption, as are investment expectations, inflation and others.
8. Who makes the investment decisions? Defined benefit plans have investment professionals who are responsible for investment policy and decisions, whereas, in defined contribution plans it is the individual members who each make their own investment decisions from a list of available options.
9. What are the survivor benefits?
10. How do the laws that govern pensions and taxes impact the costs of running the plan and the benefits available under the plan?
The longer that you work and contribute to a pension plan, the greater the pension benefit will be.
Tammy recommends the following next steps: